PHOTOS & STILLS - GALLERY

BEHINDWOODS COLUMN

CINEMA BUSINESS

HOW MONEY PLAYS THE HOLLYWOOD BOX OFFICE

The Hollywood Box Office

Like in India, ticket sales are done through two ways of (a) Counter and (b) Online in Hollywood. Out of these two, for online ticket sales, every theater chain utilizes a different company. Ticket price is same as that of theaters. Only a $1 is charged extra. That too, only when the ticket site of movietickets.com is accessed from a search engine like Yahoo! Movies.

When a customer directly accesses the movietickets.com site or if he is AMC’s reward card owner, that $ 1 would be discounted and the counter price of the ticket only is charged. Also, points are added each time when the reward card is used. Once certain reward points are reached, a small popcorn or soda may be reimbursed against the collected points.

This can be compared to the Fuel card of Satyam Cinemas, which it distributes to students without credit card to pay money in advance and book movie tickets online. If this trend continues, reward cards are not so far away. In this system, the manufacturing cost of card would not exceed 10-20 cents. When compared with the price we pay for it in theater, this card makes a sweet deal for the movie buff. Though this is business trick, it is useful to attract the masses to the theaters.

Ticket prices

Ticket price keeps changing during weekdays, weekend mornings, weekend noons and weekend evenings, depending upon the timing. It also varies with the theater chain.

For example, in AMC,

Weekdays - $ 5 (any time, same price for kids & adults)

Friday, Saturday and Sunday noon - $ 7.50

Friday, Saturday and Sunday evening to nights - $ 10.00

A price of $ 12 is charged very rarely for the films with great reception. It is said that Spielberg’s ‘War of the worlds’ commanded this price.

It is even costlier in IMAX. During weekdays $ 10 and weekends $ 14 are the prevailing prices. For kids, when regular theaters charge $ 5 all times, IMAX charges a rather premium $ 7 - $ 9.

But who determines these prices? Theater owners or the distributors? This is a complex issue. If the ticket prices were costly, people would not visit theaters, which means trouble for both. In case of the public buying the ticket paying a premium, they would not buy popcorn and snacks. This means trouble for the theater owners and profit for distributors. If ticket prices are reduced, popcorn would sell and fetch money to theater owners but the distributor would generate loss.

Due to these problems, the different dollars of prices were arrived at and fixed by theater owners themselves. Distributors do not have any say in this. However, multiple ticket rates are fixed in such a way that they would benefit both of them. These prices vary between metropolitan and rural areas. As most of the theaters are situated in cities, the pricing methodology explained above is widely followed across USA.

The costlier $ 10 - $ 14 are only in the newly released times. After a couple of weeks, no matter which time of the week it is, the ticket price would be only $ 5.

If all these are applicable for AMC theaters, there is no rule that the same must be applicable for Regal or Cinemark as well. Regal can fix two prices for day and night and can sell even without alteration during weekends too. Whatever it is, in regular theaters, new movies are never sold for more than $ 10 a ticket.

Since all the accounts are dealt with computer, would the distributor accept a detailed print out of ticket sales as a valid document? The answer is NO. Just like anywhere else in the world, though there is no practice of printing and sealing the tickets as in India, the theater owner tends to cheat the distributor, who in turn tries cheating the distributor.

So, just like India, the distribution companies would deploy their watch in the theaters. There is an option to hire professional organizations dedicatedly available for this pursuit. These companies send their employees to each theater on regular and surprise visits and verify if they are honouring the agreement in terms of number of shows, seats and days.

A theater may guarantee a distribution company to run its film for ten shows and gets $ 10000 for nuts but it can run only five shows. Or it can run five shows extra and divert the income from them to its own pockets. The inspection like this avoids such fraudulence.

Distributors too, have their share of this graft on the producers. A distribution company (name avoided) distributed a film of $ 530,000 budget. After the collection of $ 3,000,000, it received a notice to the production house claiming a cool $ 2,000,000 for break-even. Production house replied it would audit the accounts. Immediately, the loss account became profit account and the production house was duly handed over the share of $1,300,000. These kinds of malpractices are common, no matter how big the production/distribution/theater companies are involved in them.

These dodgers make hay with novices like Indie producers. If they get one, the poor Indie producer would be completely fleeced.

We have come across the term location. In USA, it means theaters. Consider a film like 2012, or Avatar, runs in 3 shows in single screen in 4,000 locations, the number of shows per day stands at 12,000. Say all of them are triple screen theaters, the number of shows become 36,000 per day. Consider a 3 days weekend, the total number of shows becomes a whopping 108,000! (For these 4000 locations, it takes approximately 8000-9000 prints; Hard disks in case of Digital projectors).

Hope you understand how a film could collect $ 100 – 300 million within 3 days of release.

For these many locations, if it is needed to collect the data, estimate the number of tickets sold and calculate the distributor’s share individually, it would be taking huge amount of time and there are lot of chances for errors. To counter this, Hollywood has a process. Even though a film is run in many screens, for all of them, a single gross amount only would be paid to the distributor for one location. Thus, if the film is running in 4000 locations, it would be communicated to the distributor in the weekend. (Weekend is Sunday for America, not Saturday.)

Typically, this collection data reaches the distributor within 12.00 – 13.00 hours of Sunday. The rest of Sunday’s collection alone would be estimated projection. This total income is the one that brings cheers or distress for the distribution company. The weekend collection is codenamed as F-S-S (Friday-Saturday-Sunday). As it takes considerably more time to evaluate the collection data from overseas, that is tracked independent of this inland collection.

In the weekend report, the top 12 collection data of a theater alone would be highlighted. Detailed, all shows reports would be submitted on Monday evening around 16.00 hours. Later, the projected amount of FSS collection (Post- Sunday afternoon) would be amended.

And from this point, the cheap bargains and fights on share dividing and straightening out of accounting start. Only difference is, since all are professional, tie-clad thieves, these ugly fights would mostly happen in low profile. However, some problems, like the one we saw above, would be pulled to the streets too. These cheating take place using high-end technology. If the production house traces the cheating with one technology, some other distribution house finds a way out to cheat in other way, through other technique.

In this fight for profit share (read hard currency), apart from these three (Theaters, Distributors and Producers), the agents of actors and actresses would also participate. At times the actors and actresses themselves! Only Superstar actors and Top-drawer directors, the privilege of percentage salary is given. Production house cheats even this top-of–the pyramid crew in payments. Green currency topples every human being upside down and crushes the personal values in no time. Yes! Money is that powerful.

All the business data thus collected for years is stored by distribution houses, production houses and theater chains and available in database in the form of customized, special software. So, during a business discussion of a new coming film, that director/actor’s previous movie performance, how it performed in each territory, how well this movie will do in collection, which show draws more crowd, which actor is having fan base in which country, previous movies with this genre’s success or failure rate – all these details would be available in the fingertips of all these three sides and the deals and negotiations are discussed over the details.

Hollywood’s cinema business does not end here. As a matter of fact, it only starts here! It is only after this; their biggest market opens up!

[…to be continued

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